Will Businesses Survive in MCO 2.0?

It happened. MCO 2.0. We, at Surf, will not be talking about that here... many people have already expressed their opinions about it. Let’s talk about how delivery becomes essential services... as we evolve to the digital lifestyle. 

Life might never be the same for us again when we resume our usual lifestyle, we had generated such a huge gig economy... that Gen X, Y, Z, and Gen Alpha might never resume to our old selves, of the regular shopping or eating anymore. Gone were the days of pizza delivery or occasional fast food... we now get chicken rice or Roti canai delivery instead. That’s a whole new level of... convenience.

Let’s look at the other side of these conveniences... Chicken rice (The Chicken Rice Shop, Ipoh) is priced at MYR10.90 on UberEATS, the shop gets MYR7.085 (35% commission rate although it reduced to 30% during the pandemic, I will use the original rate since they are likely to revert after the pandemic). 

Considering that they didn’t consider UberEATS “hefty cut” when planning their prices and profit margin. We can only assume that the final payment they got is at a loss and they have to cover the cost of the food, their rental, and employee’s wages.

“If the same chicken rice will now cost MYR16.8 for the business to get the full MYR10.90 for a single serving… will we still order from them?”

Having to adapt, and to make a healthy profit... like all businesses, The Chicken Rice Shop will have to adjust their business model. Will they move to a more secluded location, to save on the rent? or cater to deliveries only? 

Mind you, “The Chicken Rice Shop” is a franchise, there could be up to 90 little businesses, operating under that brand... obviously, we are not just talking about them... it affects thousands of restaurants and eatery. 

We are not just talking about food delivery, it’s about everything available via a digital platform... like Shopee and Lazada. Lazada charges a 5% commission from the product you are buying, and the cost is an extra “add-on” to the retailer. It’s a boon to many aspiring entrepreneurs, who now can sell something online... and not having to worry about rents. The recent “Shopee” schools that have been popping up all over Facebook is likely going to make “drop shipping” really popular. 

With hundreds of new “sellers” registering each day on Shopee (or Lazada), selling the same product... how can one “stand out” among the rest? 

Will our beloved mamak stalls and small businesses survive this “sea change” where it’s cheaper to operate without a storefront... will shopping malls still serve any purpose, other than window shopping in the future? 

With 32,469 SMEs closing since the beginning of MCO *statistics by Companies Commission of Malaysia (SSM)... and now MCO 2.0… we are looking at a very different business landscape when all this is over.